The Biden administration is making a big push to enroll student loan borrowers in its newest repayment plan before payments resume in October.
But headwinds persist with many borrowers reporting troubles with their loan servicers as they seek to sign up.
The Department of Education this week is hosting events nationwide with 100 participating organizations during its "SAVE on Student Debt" week of action to inform borrowers about the administration’s new Saving on A Valuable Education (SAVE) income-driven repayment plan and other debt-relief programs.
The goal is to reach the estimated 20 million borrowers who are eligible for lower payments using an income-driven repayment plan, but have yet to enroll.
"The Biden-Harris Administration is determined to get the word out about SAVE, and that’s why we’re thrilled to have 100 national organizations and grassroots groups joining us for this SAVE on Student Debt Week of Action. Our partners in the SAVE on Student Debt campaign will amplify Federal Student Aid's outreach and communications to borrowers by working in communities across the country to encourage enrollment in the SAVE plan, which not only offers lower monthly student loan payments, but also protects borrowers from runaway interest and ever-growing balances," Miguel Cardona, U.S. secretary of Education, said in a press statement.
Read more: Can you change your student loan repayment plan?
So far, more than 4 million student loan borrowers have enrolled in the SAVE plan that the Biden administration touts as "the most affordable ever." Of those, only 1 million are new enrollees, while the remaining were automatically enrolled from the REPAYE plan.
Getting the word out about income-driven repayment plans has been historically difficult.
Only 9% of federal borrowers are enrolled in an IDR plan, according to 2022 research from JPMorgan Chase. Of the 91% of borrowers who are not enrolled, 22% of those are eligible for a plan. That means "for every borrower on IDR there are potentially two more who are eligible but not enrolled," JPMorgan Chase concluded.
To help spread the word about the launch of SAVE, the Department of Education collaborated with grassroots organizations like Civic Nation, the National Urban League, Rise, NAACP, the Student Debt Crisis Center, UnidosUS, and Young Invincibles about SAVE.
Civic Nation has an action plan to activate borrowers for SAVE on Student Debt week. Additionally, the Federal Student Aid (FSA) office is sponsoring a webinar on Thursday, Repayment 101: Get Help With Your Federal Student Loans. Registration is free via eventbrite.
Interest on federal student loans started Sept. 1 after a three-year pandemic forbearance pause and payments are set to resume Oct. 1.
Read more: How the Fed affects student loan interest rates
But as repayment looms, many borrowers are still confused because they have new loan servicers and are encountering problems enrolling in an income-driven repayment plan. Borrowers have also faced long wait times, dropped calls, or call center shutdowns.
A Department of Education spokesperson said that the department is working with loan servicers to process applications faster. But the process would be quicker if borrowers apply on the Federal Student Aid (FSA) website.
Due to the significant number of borrowers returning to repayment at once, the Department of Education has also asked for additional resources from Congress, according to a department spokesperson.
Additionally, borrowers should familiarize themselves with the different IDR plans and requirements. Some plans are not taking new enrollees and others are available only for borrowers with certain loan types.
While the administration calls SAVE "the most affordable plan ever created," individual circumstances do apply, a Department of Education spokesperson said Tuesday. In some cases, the best income-repayment plan may not be SAVE, depending on the borrower’s situation.
Using the government’s loan simulator can provide estimates for borrowers looking to compare plans. For a more personalized comparison, borrowers are encouraged to complete the IDR application process, according to a Department of Education official.
Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government.Follow her on Twitter @writesronda Read the latest personal finance trends and news from Yahoo Finance.
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